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In this article we will check out the progression of hedge fund sentiment towards Accel Entertainment, Inc. (NYSE:ACEL) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Accel Entertainment, Inc. (NYSE:ACEL) was in 18 hedge funds' portfolios at the end of March. ACEL has experienced an increase in enthusiasm from smart money recently. There were 15 hedge funds in our database with ACEL holdings at the end of the previous quarter. Our calculations also showed that ACEL isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are several gauges shareholders can use to evaluate stocks. A pair of the less utilized gauges are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can beat the broader indices by a solid amount (see the details here).
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Jeffrey Talpins of Element Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's review the recent hedge fund action encompassing Accel Entertainment, Inc. (NYSE:ACEL).
How are hedge funds trading Accel Entertainment, Inc. (NYSE:ACEL)?
At Q1's end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the fourth quarter of 2019. On the other hand, there were a total of 0 hedge funds with a bullish position in ACEL a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Crescent Park Management held the most valuable stake in Accel Entertainment, Inc. (NYSE:ACEL), which was worth $17.8 million at the end of the third quarter. On the second spot was Simcoe Capital Management which amassed $15.9 million worth of shares. Millennium Management, Element Capital Management, and Hudson Bay Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Simcoe Capital Management allocated the biggest weight to Accel Entertainment, Inc. (NYSE:ACEL), around 4.88% of its 13F portfolio. Element Capital Management is also relatively very bullish on the stock, designating 4.77 percent of its 13F equity portfolio to ACEL.
Now, key money managers were breaking ground themselves. Wildcat Capital Management, managed by Leonard A. Potter, assembled the most outsized position in Accel Entertainment, Inc. (NYSE:ACEL). Wildcat Capital Management had $4.4 million invested in the company at the end of the quarter. Renaissance Technologies also made a $0.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Andrew Weiss's Weiss Asset Management and Bart Baum's Ionic Capital Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Accel Entertainment, Inc. (NYSE:ACEL) but similarly valued. These stocks are Changyou.Com Ltd (NASDAQ:CYOU), Universal Insurance Holdings, Inc. (NYSE:UVE), Virtus Investment Partners Inc (NASDAQ:VRTS), and Franks International NV (NYSE:FI). This group of stocks' market valuations resemble ACEL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CYOU,10,72996,-3 UVE,11,35019,-2 VRTS,12,40961,-2 FI,7,5437,-3 Average,10,38603,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $70 million in ACEL's case. Virtus Investment Partners Inc (NASDAQ:VRTS) is the most popular stock in this table. On the other hand Franks International NV (NYSE:FI) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Accel Entertainment, Inc. (NYSE:ACEL) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.4% in 2020 through June 22nd but still managed to beat the market by 15.9 percentage points. Hedge funds were also right about betting on ACEL as the stock returned 34.6% so far in Q2 (through June 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.